The proliferation of ‘best of breed’ point solutions across the enterprise has many IT leaders launching rationalization and integration strategies aimed at reducing tech debt and complexity.
Years into strategies centered on adopting cloud point solutions, CIOs increasingly find themselves facing a bill past due: rationalizing, managing, and integrating an ever-expanding lineup of SaaS offerings — many of which they themselves didn’t bring into the organization’s cloud estate.
Salesforce, Workday, Atlassian, Oracle, Microsoft, GitHub, and ServiceNow are but a few of the many vendors whose cloud applications make up the new tech backbone for most enterprises today, in conjunction with customized in-house apps and niche offerings across public clouds.
“It definitely is a challenge,” says Greg Beltzer, head of technology for the US wealth management arm of Royal Bank of Canada.
Beltzer, other CIOs, and industry analysts note that the explosion in SaaS deployments has caused inefficiencies and complexities that can no longer be ignored, even as enterprise cloud adoption rolls on.
As a result, SaaS management has become a top priority for many enterprises. According to IDC SaaS Path research from 2023, 67% of businesses with more than 1,000 employees have employed a SaaS management platform, says IDC analyst Frank Della Rosa — a market category that includes a broad array of options, such as Productiv, Zylo, Flexera One, Blissfully, Torii, BetterCloud, Zluri, Apptio, and LeanIX, among many others.
For many CIOs, embracing cloud point solutions has been a key facet of their strategy to get out of the data center management business. But SaaS sprawl — the result not just of IT decisions but also line-of-business tech spending choices — is leaving CIOs with a challenge they tried to evade.
“There was a huge push to move platforms to the cloud for many good reasons, and organizations have taken advantage of cloud capabilities and vendor support. However, sprawl is sprawl,” says Julie Mohr, principal analyst with Forrester.
The remedy, Mohr says, is something IT leaders can never outrun.
“Managing technical debt, rationalizing services, and reducing infrastructure complexity have always been essential to an organization’s success in creating value and delivering on expectations,” she says. “Moving to the cloud doesn’t make that go away, and it isn’t the vendor’s responsibility. Managing a portfolio of services is vital [wherever those services reside], not just those on-prem.”
Rationalize and integrate
For many IT leaders, mergers and decentralization on top of cloud migration strategies are significant contributors to SaaS management headaches, resulting in increased complexity and redundancies that can be challenging to uncover.
Expedia Group, for example, grew significantly over time through acquisitions to comprise 21 separate travel brands, each with its own tech stack and SaaS providers, says Rajesh Naidu, chief architect and head of data platform and data management.
Addressing the ensuing sprawl was no quick fix.
“We’ve just wrapped up a three-year journey to simplify our platform,” Naidu says. “During this process, we had a good opportunity to reevaluate all the SaaS providers we were working with and consider how we could simplify this across the organization. Putting some rigor behind this strategy has helped us cut down on unnecessary complexity and sprawl.”
RBC US’s Beltzer points out another challenging aspect of SaaS sprawl: integration.
Beltzer placed Salesforce Finance Services Cloud at the center of his cloud strategy due to its extensibility and availability of pre-built connectors to other SaaS offerings, but on whole, his team relies on the MuleSoft Anypoint integration platform to connect data on-prem and in the cloud.
“The problem with SaaS applications is they don’t talk to each other or they don’t integrate,” Seltzer says. “It’s often the data in these silos [that needs] to be integrated between multiple sites, multiple systems, especially in the [real-time] world that we live in today versus the more batch-oriented architecture of a decade ago.”
Collin Campbell, business information officer at Cushman & Wakefield, has engineered a different solution to this problem. He uses external providers and in-house developers to write connective “tissue” code to provide integration capabilities.
The “underlying current that’s really driving some of the anxiety around SaaS sprawl is around getting data out of the SaaS applications and fit for consumption,” says Campbell, whose company relies on a tangle of roughly 75 SaaS applications core to the business and another 135 SaaS solutions spread across various business units.
Cushman & Wakefield, a Microsoft shop, doesn’t rely on an all-encompassing integration platform such as MuleSoft, because Campbell sees it as “a very expensive solution that I think you can find an easier way to do.” Instead, in working across Azure, “we use some proprietary solutions that we licensed and then do very simple coding,” he says.
The commercial real estate services firm, which is also building a foundation for enterprise-wide AI, has seen its integration efforts pay off from a client perspective, Campbell says, adding that Cushman & Wakefield’s clients themselves are dealing with similar problems around sprawl and integration, “trying to minimize the impact from their previous, let’s say, procurement-based decisions.”
For Bryan Muehlberger, CIO at Vuori, the rise of SaaS use has also led to a corresponding rise in vendor management challenges.
“We are starting to look at players in the market that can help manage and track our licensing, utilization, and governance,” says Muehlberger, who has seen a 25% to 50% increase in SaaS solutions across the apparel company’s technology stacks in the past five to seven years.
“It used to be that you had 15 to 30 key vendor partners, and now it’s more than 100,” he says. “It’s unwieldy at times managing a detailed budget by vendor. Throw resellers in the mix, and it gets even more complicated.”
A question of TCO
Brian Woodring, CIO of Rocket Mortgage, employs more than 1,000 developers and is proud of the enterprise cloud architecture his team has built using AWS as its core platform. But even so, it seems no enterprise is free of this burden.
Woodring acknowledges that, for Rocket Mortgage, which relies on Salesforce, Workday, and ServiceNow as many companies do, SaaS sprawl is a growing headache. Like Cushman & Wakefield, his engineers are often tapped to deliver code to integrate and stitch up problems between SaaS apps.
And he doesn’t see the issue going away anytime soon.
“These systems are getting bigger and more complicated. The sprawl, the complexity, the contracts, all the new features because there’s an arms race where they’re all adding as much as they can, and much of it overlaps with each other”— all of it contributes to the challenges his team faces, he says.
And while he appreciates that his engineers could not likely construct solutions to rival these best-of-breed enterprise SaaS solutions, it does make him wonder whether more SaaS adoption is worth it.
“Each has its own ecosystem of people that you need to hire and practices that you need to install,” he says. “And I’ll admit, at the end of the day, you wonder if you’ve actually saved any money at all with all the other things that come with it.”
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